Box 5-1
The Federal Role in Economic Development and Innovation

The federal government has been active in promoting economic development and innovation since the early days of the nation, manifested in such initiatives as the creation of the Patent Office (1802), the Coast and Geodetic Survey (1807), and early initiatives to improve navigation. Between the 1860s and the 1930s U.S. manufacturers were protected by a high tariff wall intended, in part, to foster new industries. Since World War II, investments in research by DoD, NIH, NASA, DOE, NSF, and other government institutions have given rise to new technologies creating entire new industries and millions of U.S. jobs. Federal funding was critical to the development of the transistor by Bell Labs, the emergence of the semiconductor industry, the development of GPS, and the creation of the Internet, and if anything, the importance of federal support for innovation is increasing. A survey of U.S. innovation concluded

Whereas the lion’s share of the R&D 100 Award-winning U.S. innovations in the 1970s came from corporations acting on their own, most of the R&D 100 Award-winning U.S. innovation in the last two decades have come from partnerships involving business and government, including federal labs and federally funded research… [T]he federal government is playing a much more supportive and important role in innovation.3

supports development of technologies relevant to defense and national security, which sometimes has little or no near term commercial applicability. The U.S. national laboratories support research related to national defense, energy security and public health; despite a long history of initiatives to foster increased commercial application of their research results, their impact in the commercial arena has been an ongoing subject of concern on the part of policymakers.4

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3Fred Black and Matthew R. Keller, “Where Do Innovations Come From? Transformations in the U.S. National Innovation System, 1920-2006,” Information Technology and Innovation Foundation, July 2008, pp. 2-3

4A number of recent reports have concluded that the metrics available to assess the federal laboratories’ performance in technology transfer to industry are inadequate, but that a number of factors inhibit such transfers, including the laboratories’ management, supervision, culture, available resources, mission(s), and location. See National Institute of Standards and Technology, Federal Laboratory Technology Transfer Fiscal Year 2010, August 2012; Institute for Defense Analysis Science and Technology Policy Institute, Technology Transfer and Commercialization Landscape of the Federal Laboratories, June 2011. In 2009, the General Accountability Office conducted a review of technology transfer by the DOE laboratories. It found that “the completeness and accuracy of DOE’s technology transfer data are questionable…One laboratory failed to report complete information on its federal work-for-others agreements for fiscal years 2004 through 2008…[M]ore could be done to ensure that promising technologies are being transferred…DOE’s lack of



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